Saturday 3rd Dec 2016 - Logistics Manager

Logistics industry not prepared for Brexit

Fewer than one in five logistics organisations had a post-Brexit plan in case the UK voted to leave the European Union, a Logistics Manager survey has revealed.

Logistics industry not prepared for Brexit

EU Berlaymont Building

The referendum vote to leave the EU was described as an “earthquake moment” by Road Haulage Association chief Richard Burnett.

But Logistics Manager’s quarterly trends survey found that 81.6 per cent of 320 respondents said they had no plan in that eventuality, despite the fact that 52.2 per cent said that a UK exit would have an impact on their business.

The survey, for the second quarter of 2016, was conducted in the two weeks running up to the referendum.

The survey also asked what logistics professionals regarded at their main concerns if the UK left the EU. Some 71 per cent highlighted economic stability as a major concern, while 56 per cent said currency value, and 52 per cent were concerned about the impact on trade deals with Europe. Some 17 per cent also pointed to the possible reduction in migrant workers as an issue.

Following the vote, the FTA warned that leaving the EU risks ‘new costs, restrictions and bureaucratic requirements being imposed on moving goods in and out of Europe’. It has called on the government to prioritise arrangements for international freight transport in its negotiations and to minimise additional legislation, while keeping costs as low as possible for businesses in the UK.

“Even though we are coming out of Europe politically, it remains our biggest export market and the supplier of a high proportion of our imports,” said FTA chief executive David Wells. “We cannot allow new bureaucratic burdens to hamper the efficient movement of exports heading for customers and imported goods destined for British consumers.”

He added: “The Government has two years to ensure the conditions currently imposed on other non-EU member states such as Albania and Serbia are not imposed on UK freight flows. Norway and Switzerland have better arrangements but have accepted tough conditions including the free movement of people, so this will be a difficult negotiation.”

Chief executive of the RHA, Richard Burnett described the result as an ‘earthquake moment’ for the entire country and economy. “We simply cannot take anything for granted. It’s vital that Ministers and the Bank of England work quickly to steady markets and nerves.”

Peter Ward, chief executive officer of the United Kingdom Warehousing Association  said that the vote result was not what he, or most of the pundits were expecting.

“Indeed, our polls have consistently shown a clear preference among members to remain,” he said. “In my view, this momentous decision by the UK will have serious global implications, bringing new challenges for British businesses and particularly for those within our industry.

“Many of our members trade across Europe and have enjoyed the benefits of ‘logistics sans frontiers’ for forty years, with goods entering and leaving our country freely; my hope now is that as new trade agreements are forged, there is no return to red tape and complex customs regulations that prove burdensome and costly for our members.  As usual the devil is in the detail, and we will work hard on behalf of our members to ensure those negotiating Britain’s exit fully understand the ramifications.

“On the positive side, we have for some time been talking about the new opportunities for British business emerging with the big super-powers in different parts of the world; already we are focussing on the tremendous potential in China.”

Mike Hawes, chief executive of the trade body for the UK automotive sector, SMMT said that the government must now maintain economic stability and secure a deal with the EU that will guarantee UK automotive interests.

“This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment,” said Hawes.

Andrew Baxter, managing director of logistics operator Europa Worldwide Group, described the vote as “a great day for Britain”.

“Even though the world does not yet seem to realise, Britain has just taken a step that will ultimately make it economically safer and more secure. The EU is on the wrong course. The Euro cannot work without a superstate, and a superstate will not work in practice. It’s time for the EU to rethink its direction.”

But Pall-Ex managing director Kevin Buchanan  said that the business has always felt Britain is stronger in the union – and is concerned about the impact it will have on the supply chain.

“We’re saddened that the majority of people didn’t share our view,” said Buchanan. “We stand firm in our belief that the UK’s supply chain will be deeply affected by the referendum outcome, as it’s always relied on an efficient international logistics network. Jobs, trade and investment are all likely to be impacted.”

Mike Danby, CEO of Advanced Supply Chain, pointed out that being part of the EU brought with it a collective power we needed to make international trade deals. “Britain will now be a smaller international player, up against the US, EU and China in international negotiations. Even though we are a big economy, we’re not anywhere near close to the 500m population of the EU.

“Business is hard enough without unnecessary headwinds, and this is what the result has delivered. My primary concern as ever, is making sure we are prepared for the new trading environment this will deliver – we need to ensure our business and our people continue to thrive.”

A FedEx spokesperson said: “As the process moves forward, we remain committed to serving our customers with effective and reliable service across our global network.”

Courier company ParcelHero called on the government to secure access to the Single Market to avoid the imposition of new tariffs. “ParcelHero regularly ships to those countries that are in Europe but not in the EU, such as Switzerland, Norway and Iceland, said David Jinks of ParcelHero. “Parcels sent to these countries face customs delays, red tape and tariffs of between 5-9 per cent on average. We hope that the UK will not find itself with similar customs charges and paperwork.”